LNM looks for further growth in Eastern Europe

LNM looks for further growth in Eastern Europe

LNM has now completed the long lasting discussions and finally concluded with the National Property Fund of the Czech Republic, the deal for its purchase of state-owned steel maker Nova Hut under the framework of the privatisation of company. The company will now be renamed Ispat Nova Hut. The privatisation of the steel mill was completed last week, on January 31, 2003. The indebted steel maker was agreed to be sold to LNM against $ 85 million plus $ 820 million in assumed debt, guarantees and new investments, i.e. at a total of $ 905 million. The plans are to increase the efficiency and productivity at the Czech steel mill. Company authorities express that they are aiming to modernise the mill's operations, improving particularly the value-added steel production, including electrical steel, stainless and corrosion resistant steel. At the first stage, the heavy sections mill is scheduled to be modernised including installment of a new lower capacity furnace, providing an annual capacity reduction of 300'000 mts in 2-3 years. The Czech mill has also closed down its rolling mills with a 1.4million mts overall capacity, and is only running the new Steckel mill with 1 million mts annual capacity. Steel industry in the Czech Republic, similar to Poland, have been suffering due to the collapse of its main markets from the former communist bloc and therefore has gone under heavy debts which had to end up in serious reduction and job cuts. The Czech Government is also hoping for the sales of Vitkovice Steel to LNM, however, at this stage, it appears that the Government and LNM have not been able to reach an agreement on the price for such takeover. LNM chairman Mittal is quoted in the press stating that he expects the Czech Government to take initiatives and currently not revising any bids for Vitkovice. LNM seems willing to further strengthen in the Eastern Europe and is looking to acquire the Polish steel assets, Polski Huty Stali. The company is currently competing with other major steel makers such as US Steel and Arcelor in this respect.